H70 - State and Local Government; Intergovernmental Relations: GeneralReturn

The paper deals with the issue of fiscal decentralization in Czech Republic. The purpose of the paper is to measure the fiscal decentralization in Czech Republic in both aspects, the current state and recent progress, by comparing results with OECD-Europe unitary countries and CEE countries. The paper compares standard and modified decentralization ratios in time and geographically, using the IMF Government Financial Statistics and OECD Revenue Statistics data. The analysis shows that though the expenditure decentralization in Czech Republic is quite high, the degree of revenue and tax decentralization is low. This result is supported also by the comparison with OECD-Europe unitary countries average. After comparing the results with CEE countries average, we can see similar or higher degree of expenditure and revenue decentralization. Within years 1999 to 2008 Czech Republic showed a general tendency of expenditure and revenue decentralization to grow. However, after considering the conditionality of grants allocated to sub-central government, one can see a stagnation of expenditure decentralization. When the degree of taxing power of sub-central governments is considered, the decline of revenue decentralization and stagnation of tax autonomy can be seen.